Posts Tagged ‘business’
At first glance, your reaction may be, “Duh- of course asset management is important- it’s what we do!” But let’s look a little deeper into the whole concept of managing investments and how the decisions we make as financial professionals will have a profound impact on our clients’ lives- and our livelihood.
Asset management should begin with compliance. From selecting appropriate investments to knowing your client’s risk tolerance, everything we do must be in the best interest of the person(s) we are serving. Recently, there has been discussion about increased fiduciary standards for financial professionals. Whatever course legislation takes, it is fairly certain that our compliance burden will increase- perhaps significantly.
Some advisors are going back to the classroom and obtaining securities and/or insurance licenses that enable them to provide clients with products and services that better meet their needs. This is a trend that makes a great deal of sense in the current economic climate and one that will ultimately benefit both the client and advisor.
The decision whether to manage assets yourself or to hire a money manager is another critical element. Some professionals want the freedom to select investments and create a portfolio they can manage themselves; like a conductor, they prefer to lead the orchestra. But other advisors choose to delegate investment selection to a money management firm with substantial resources; in so doing, they concentrate on the client relationship rather than the minutiae of portfolio management.
Finally, the type of investments and insurance products we use with clients will continue to evolve. Diversification does not mean stocks and bonds. Strategies such as absolute return and tactical management will become more familiar as clients demand- and we provide- a more favorable risk/return scenario.
There has never been a better time to be a financial advisor!
Tags: asset management, business, clients
Posted in business management, Client Relationships, Investments | No Comments »
On March 22, 2010, the Senate Banking Committee (Committee) approved the Restoring American Financial Stability Act of 2010 (RAFSA), S-3217, by a party-line vote of 13 to 10. I am pleased to report that the bill passed by the Committee contains a provision directing the Securities and Exchange Commission (SEC) to study all the issues surrounding harmonization of broker-dealer and investment adviser oversight. We supported the inclusion of this study in RAFSA because it will provide the SEC, investor advocates, financial services industry professionals, and other stakeholders with an opportunity to shape these important regulatory reforms without a rush to judgment in a politically charged atmosphere. We support the creation of a new universal standard of care and an industry-funded self-regulatory organization for investment advisers. We believe the study represents the best available opportunity to achieve our goals.
On April 12, 2010, the Financial Services Institute submitted a letter to all Senators urging them to support the SEC study in the final version of RAFSA. RAFSA is expected to make its way to the Senate floor in the next couple of weeks.
Many of you have responded to our Calls to Action by letting your Senator know how you feel about important aspects of this legislation. We are grateful for your support and involvement in the process. It does make a difference!
Tags: business, independence, regulation
Posted in business management, Compliance, independence | No Comments »
My wife Kathy and I recently attended a function at Stonehill College in Easton, Massachusetts. We both graduated from Stonehill more years ago than we care to remember but our ties to the college remain as strong as ever since our daughter, Julianne, is a freshman there.
As we look back, one of the most important influences in our lives was our college education. Depending on the chronological period you were enrolled, you may have experienced anything from Vietnam protests to Wi-Fi in the cafeteria. Suffice it to say, America’s college campuses have evolved significantly over the past few decades and will continue to change to meet the needs of incoming students.
If you are in a position to do so, I urge you to consider contributing to your alma mater. The recent economic turmoil has not only wrecked havoc with endowment funds but has also increased the number of students requesting financial aid. Given the importance of a college education in today’s world, it is vital that qualified individuals receive the funds they need to succeed.
Tags: business, clients
Posted in business management, Client Relationships, Uncategorized | No Comments »
On Monday, March 22, 2010, the Senate Banking Committee (Committee) approved the Restoring American Financial Stability Act of 2010 (RAFSA) by a party-line vote of 13 to 10. I am pleased to report that the bill passed by the Committee contains a provision directing the Securities and Exchange Commission (SEC) to study all the issues surrounding harmonization of broker-dealer and investment adviser oversight.
As mentioned in my March 15 blog, I supported the inclusion of this study in the RAFSA because it will provide the SEC, investor advocates, financial services industry professionals, and other stakeholders with the opportunity to shape these important regulatory reforms without a rush to judgment in a politically charged atmosphere. From the start of this important debate, we have embraced regulatory reforms that support universal access to competent investment advice, clear and concise client disclosures, and uniform and effective regulatory supervision of all market participants. We still support the creation of a new universal standard of care and an industry-funded self-regulatory organization for investment advisers. We believe the study represents the best available opportunity to achieve our goals. I will continue to monitor RAFSA as it makes it way to the Senate floor in the next few months.
Many of you responded by letting your Senators know how you feel about important aspects of this legislation. We are grateful for your support and involvement in the process. It does make a difference.
Tags: business, Compliance, independence
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A growing number of Senate Banking Committee members are indicating their support of a provision that would replace the regulatory reform draft legislation’s requirement that all financial advisors become registered investment advisers with an amendment that would direct the SEC to study all the issues surrounding harmonization of Broker/Dealer and investment adviser oversight.
I support the adoption of the study because it will provide an opportunity to shape regulatory reforms in a manner that is workable for all client situations and across all business models. Furthermore, I continue to support the creation of a new universal standard of care and an industry-funded self-regulatory organization for investment advisers. I believe the proposed study represents the best available opportunity to achieve these goals.
I urge you to call or write your Senator in support of an SEC study of these important issues. The Financial Services Institute provides a link that can help you quickly contact your Senator through the FSI Advocacy Action Center: http://www.bipac.net/issue_alert.asp?g=FSI&issue=Senate_Banking_Committee_Study&parent=FSI
I have personally contacted my Senators and asked them to support this study. I urge you to join me so we can maximize our impact.
Tags: business, Compliance, independence
Posted in business management, Compliance, independence, Investments | No Comments »
The Commonwealth of Massachusetts passed final regulations concerning the protection of its residents’ personal information. The regulations outline minimum standards that must be met with regard to the protection and maintenance of paper and electronic records that contain personal information. To view the rule in its entirety, please click on the following link:
www.mass.gov/Eoca/docs/idtheft/201CMR1700reg.pdf
The regulations apply to “all persons that own or license personal information about a resident of Massachusetts.” This means that any person or business that collects personal information in the course of their business and has customers or employees who are residents of Massachusetts must comply. It does not matter if you or your business is not actually located in Massachusetts.
Massachusetts considers personal information to be a resident’s first and last name or first initial and last name in combination with one of the following: Social Security number; driver’s license or state-issued ID number; financial account number; or credit or debit card number.
The deadline for compliance is March 1, 2010.
If you determine that the rule does apply to you, there are a few steps that you should take. First, read the regulations. It is important for anyone these rules affect to fully understand their scope and requirements. Second, identify the types of personal information that you or your business collects and maintains. The typical Rep/Advisor has multiple pieces of client information that must be protected. Third, develop and maintain a comprehensive written information security program. This program is required by the rules and must cover various items. Finally, implement necessary computer security requirements. As part of your written security program, you will need to maintain certain minimum standards of protection for electronic records.
Tags: business, Compliance
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The Financial Services Institute (FSI) is the “Voice of Independent Broker-Dealers and Independent Financial Advisors.” The organization has done a terrific job of speaking out on issues that affect independent advisors.
FSI President and CEO Dale E. Brown said last week that proposed legislation that could require independent broker-dealers to reclassify independent financial advisors as employees would destroy their business model and reduce their independence. “The independent broker-dealers and the independent contractors they license have a three-decade record of compliance with applicable rules, so there is no need for the IRS to be given any reason to question whether or not our industry is appropriately classified,” Brown said.
Currently independent brokerage firms pay reps on an independent contractor basis, allowing them the independence of working for themselves. But legislation that was introduced to the House in late July by Rep. Jim McDermott (D-Wash) and to the Senate in December by Sen. John Kerry could lead to high costs and extra hassle for independent broker-dealers.
Please contact your representatives in Washington and urge them not to support S. 2882, the Taxpayer Responsibility, Accountability and Consistency Act of 2009.
Tags: business, client ownership, independence
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I recently had an enlightening conversation with a financial advisor who told me that her broker dealer was charging her $300 for each advisory account- and she couldn’t pass that fee along to clients. Another Representative confided that his brokerage firm charges 30 basis points on all advisory accounts- even those that he manages himself.
The bottom line is that payout isn’t the only thing to consider when evaluating a broker dealer. Be careful to ask about ticket charges, account fees and other “add-ons” that can significantly impact your take-home compensation.
Tags: business, transition
Posted in business management, independence, Investments, transition | No Comments »
Much has been written and discussed lately about alternative products. That is, those investments that are not deemed to be a “standard” part of a client portfolio. Of course, that could lead into a significant dialogue on what is “standard” or “normal” and what isn’t, but we’ll leave that for another time.
When considering alternative products, the first step is to “know your investment.” At Cambridge, we are fortunate to have a top-notch due diligence staff that carefully screens products before they are made available to Rep/advisors. This extra attention enables Rep/advisors to better assist clients with alternative investment programs.
But the result of such scrutiny is a wide variety of alternative investments that Cambridge Rep/advisors can choose from. Managed futures, direct participation programs, non-public limited partnerships, structured certificates of deposit and other products enable the Cambridge Rep/advisor to create a portfolio that better meets the client’s needs.
Alternative investments won’t be the core of a client portfolio. But they can be important components that are critical to helping someone reach their financial goals. I know many of our financial professionals are using these products confidently, thanks to the work done by the Cambridge due diligence staff!
Tags: business, clients
Posted in business management, Investments | No Comments »
The status of financial professionals as independent contractors is in jeopardy given recent legislation which proposes blanket removal of a safe-harbor provision that has been in place since 1978. On July 30, Rep. Jim McDermott (D-WA 7th) introduced H.R. 3408, the Taxpayer Responsibility, Accountability and Consistency Act of 2009. The bill’s core provisions make it more difficult for employers to classify workers as independent contractors.
While the proposal is intended to address worker classification problems in other industries, it would have serious unintended negative consequences for independent Broker/Dealers, independent financial advisors, and the clients they serve.
Negative impact from the passage of this legislation and repeal of the safe harbor provisions would be significant:
• Independent financial advisors would be exposed to IRS scrutiny of worker classification status
- And could be subject to back taxes, penalties, and interest
• The IRS could force independent financial advisors to become employees of their Broker/Dealer
- This would undermine true independence and mitigate their ability to best serve their clients
- Ownership of clients and the practice could move to the broker dealer
Please call or write your Representatives and urge them not to cosponsor H.R. 3408.
Tags: business, client ownership, independence
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